Korea Labor Contract Act

Korea’s Labor Contract Act

• Terms of Contract (Article 23) = The terms of the labor contract are valid only within one year, except in cases where there is no fixed term as necessary for the completion of a certain project
• Statement of Terms of Employement (Article 24) = An employer shall clearly state remuneration, working hours, and other terms of employment to an employee at the time when a contract of employment is concluded. In this case, matters as to each constiuent item of remuneration and the methods of calculation and payment shall be specified according to the methods prescribed by the Presidential Decree.
•  Disciplinary Action and Dismissal (Labor Standard Act 30) = An employer shall not dismiss, lay-off, suspend or transfer an employee or reduce his/ her wages, or take other punitive measures against him/ her without justifiable reasons. An employer shall not dismiss any employee during the period of temporary interruption wthin the 30 days of the end of that period, during the maternity leave and during the 30 days after leave, nor shall any female employee before and after childbirth be dismissed.

Understanding Your Insurance Entitlements While in Korea

Any employers hiring foreign workers under the Employement Permit System must subscribe to four major social insurance plans and foreigners will receive the same benefits as Korean citizens:

• National Pension
• Health Insurance
• Industrial Accident Insurance
• Unemployment Insurance

Termination Allowance

According to Labor Standards Act No.46, workers should be given more than 70% allowance during the period of termination caused by the employer. However, they could possibly receive the allowance of 70% excess of average wages. Even though the business can not continue inevitably, the workers should be given a small amount of allowance from the Standards Act No. 1 . Violation of this Act will result to up to 3 years imprisonment or a fine of 2 billion won.

Minimum Wage System

The Korea Labor Law set a minimum level of wage for workers and requires the employer to pay more than the minimum standard wage. Therefore it will be a breach of law if the employer pays less than the minimum level set by the government. The minimum wage is determined from Jan1 to Dec 31 every year. The minimum wage is 2010 is as follows; hourly wage of 4,110 won, daily wage is 32,880 won (8 hours a day), monthly wage is 858,990 won (40 hours a week) or 928,860 won (44 hours a week)

For more information and further inquiries, contact the Ministry of Labor’s hotline (1350) or visit http:/english.molab.go.kr/